The premium paper that card makers use is expensive…and is getting more so. Workers in China who help print out the cards are also beginning to demand higher wages.

There isn’t much competition. Two companies control 90% of the market and their relationships with retailers and suppliers prevents other entrants to the market.

E-cards are threatening the industry and cardmakers are now experimenting with gimmicks such as a $20 card with an LCD screen that displays a 50 photo musical slideshow.

The biggest reason though, is that consumers are willing to pay. Of the $20 billion we spend on Valentine ‘s Day only 4% goes to the card. Compared to the overall cost of the occasion, the cards are a bargain.

Read more about ‘value cards’, the various teams that come together to make a card, and some notes about the psychology of using high prices over here.